Exhibit 10.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 12th day of
December, 2003 by and among NEXMED, INC., a Nevada corporation (the "Company"),
and the Purchasers set forth on the signature page affixed hereto (each a
"Purchaser" and collectively the "Purchasers").
RECITALS
A. The Company and the Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended;
B. The Purchasers wish to purchase, and the Company wishes to sell and
issue to the Purchasers, upon the terms and subject to the conditions stated in
this Agreement, an aggregate of $6 million in principal amount of the Company's
5% Convertible Notes due May 2007 in the form attached hereto as EXHIBIT A (the
"Notes"), which Notes shall be convertible into shares of common stock of the
Company, $0.001 par value per share (the "Common Stock"), in accordance with the
terms of the Notes, in such amounts as are set forth on the signature page
attached hereto and executed by each such Purchaser, for an aggregate purchase
price of $6 million;
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement,
in the form attached hereto as EXHIBIT B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, and applicable state securities laws; and
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
1.1. "Affiliate" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with, such
Person, where "control" means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
1.2. "Agreements" means this Agreement, the Registration Rights
Agreement, the Subsidiary Guaranty, the Mortgage Modification, and the Notes.
1.3. The "Company" shall refer to the Company (as defined in the first
paragraph hereof) together with its subsidiaries wherever applicable (including
without limitation with respect to all representations of the Company unless the
context otherwise requires).
1.4. "Closing" means the consummation of the transactions contemplated
by this Agreement, and "Closing Date" means the date of such Closing.
1.5. "Convertible Securities" means any convertible securities,
warrants, options or other rights to subscribe for or to purchase or exchange
for, shares of Common Stock.
1.6. "Notes" shall have meaning set forth in the recitals to this
Agreement.
1.7. "Material Adverse Effect" means a material adverse effect on the
(i) condition (financial or otherwise), business, assets or results of
operations of the Company; (ii) ability of the Company to perform any of its
material obligations under the terms of the Agreements; or (iii) material rights
and remedies of a Purchaser under the terms of the Agreements.
1.8. "Mortgage" means the Mortgage, Security Agreement and Assignment
of Leases and Rents executed by the Operating Subsidiary in favor of the
Purchasers dated as of June 11, 2002, securing the Company's obligations under
the 2002 Notes.
1.9. "Mortgage Modification" means the First Amendment of the Mortgage,
Security Agreement and Assignment of Leases and Rents, in the form attached
hereto as EXHIBIT C, executed by the Operating Subsidiary in favor of the
Purchasers, modifying the terms of the Mortgage in order to secure the Company's
obligations under the Notes as provided therein.
1.10. "Operating Subsidiary" means NexMed (U.S.A.), Inc., a Delaware
corporation which is wholly-owned by the Company.
1.11. "Person" means an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock company,
joint venture, pool, syndicate, sole proprietorship, unincorporated
organization, governmental authority
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or any other form of entity not specifically listed herein.
1.12. "SEC" means the U.S. Securities and Exchange Commission.
1.13. "SEC Filings" means the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001 and all other reports filed by the
Company pursuant to the 1934 Act since December 31, 2001.
1.14. "Securities" means the Notes and Underlying Shares.
1.15. "Subsidiary Guaranty" means the Subsidiary Guaranty, in the form
attached hereto as EXHIBIT D, executed by the Operating Subsidiary in favor of
the Purchasers, guaranteeing the Company's obligations under the Notes.
1.16. "Underlying Shares" means the shares of Common Stock issued or
issuable upon conversion of, as payment for interest under, or otherwise
pursuant to, the Notes.
1.17. "Variable Rate Transaction" means a transaction in which the
Company issues or sells, or agrees to issue or sell, Common Stock or Convertible
Securities in which the applicable sale, conversion, exercise or exchange price
or rate may directly or indirectly effectively be reduced, reset or repriced
based upon future events or occurrences, future trading prices or quotations, or
future issuances of Common Stock or Convertible Securities (including such
resets effected directly or indirectly by the issuance of additional
securities), including an "equity line" transaction but excluding standard
provisions for rights of first refusal on additional financings and standard
anti-dilution provisions including weighted-average anti-dilution provisions
substantially similar to those set forth in the 2002 Notes which are contained
in Convertible Securities.
1.18. "1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1.19. "1934 Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
1.20. "2002 Notes" means the Company's 5% Convertible Notes due
November 30, 2005 issued to the Purchasers on June 11, 2002.
2. Purchase and Sale of the Notes. Subject to the terms and conditions of
this Agreement and on the basis of the representations and warranties made
herein, each of the Purchasers hereby severally, and not jointly, agrees to
purchase, and the Company hereby agrees to sell and issue to each of the
Purchasers, the principal amount of Notes set forth on such Purchaser's
signature page attached hereto and as indicated herein.
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Each Purchaser's aggregate purchase price (the "Purchase Price") for the Notes
to be purchased hereunder is set forth on such Purchaser's signature page
attached hereto.
3. Closing.
3.1. Closing Procedure. The Company shall promptly deliver to
Purchasers' counsel, in trust, Notes registered in the names of the Purchasers
as indicated on the signature pages to this Agreement, representing all of the
Notes, with instructions that such Notes are to be held in escrow for release to
the Purchasers only upon payment of the Purchase Price to the Company and
confirmation of receipt by the Company or its counsel. Upon receipt by counsel
to the Purchasers of the Notes and the execution and/or delivery of such other
documents contemplated hereby to be executed and/or delivered on or prior to the
Closing, Purchaser shall promptly cause a wire transfer in same day funds to be
sent to the account of the Company as instructed in writing by the Company, in
an amount representing the Purchase Price. On the date the Company receives such
funds, the Notes shall be released to the Purchasers (and such date shall be
deemed the "Closing Date").
3.2. Closing Date Deliveries.
(a) On the Closing Date, the Company shall deliver to the
Purchasers:
(i) Notes in the form attached as Exhibit A;
(ii) The executed Registration Rights Agreement in the form
attached as Exhibit B;
(iii) The executed Subsidiary Guaranty in the form attached
as Exhibit D and the executed and acknowledged
Mortgage Modification in the form attached as Exhibit
C, in each case executed by the Operating Subsidiary;
(iv) The opinion(s) of counsel referred to in Section 7.5
below; and
(v) An officer's certificate in form and substance
reasonably satisfactory to the Purchasers and the
Purchasers' counsel, executed by an officer of the
Company and the Operating Subsidiary, certifying as to
satisfaction of applicable closing conditions,
incumbency of signing officers, the true, correct and
complete nature of the Certificate of Incorporation
and By-laws, good standing and authorizing
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resolutions, in each case of the Company and the
Operating Subsidiary.
(b) On the Closing Date, the Purchasers shall deliver to the
Company:
(i) The Purchase Price set forth on the Purchasers'
signature page hereto;
(ii) The executed Registration Rights Agreement; and
(iii) With respect to The Tail Wind Fund Ltd., the executed
conversion notice electing to irrevocably convert the
outstanding balance under the 2002 Notes (provided the
applicable Underlying Shares, as defined in the 2002
Notes, are timely issued and delivered to The Tail
Wind Fund Ltd. in accordance with the terms of the
2002 Notes).
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers that:
4.1. Organization, Good Standing and Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and own its
properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
licensing necessary unless the failure to so qualify would not be reasonably
likely to result in a Material Adverse Effect. All of the Company's subsidiaries
are listed by name and jurisdiction on Schedule 4.1 attached hereto. All
subsidiaries are wholly-owned by the Company. The Operating Subsidiary is a
wholly-owned subsidiary of the Company and owns all the Mortgaged Property (as
defined in the Mortgage).
4.2. Authorization. The Company has full power and authority and has
taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of
the Agreements, (ii) authorization of the performance of all obligations of the
Company hereunder and thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Securities. The Agreements
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization,
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moratorium and similar laws of general applicability, relating to or affecting
creditors' rights generally.
4.3. Capitalization. Set forth on Schedule 4.3 hereto is (a) the
authorized capital stock of the Company on the date hereof; (b) the number of
shares of capital stock issued and outstanding on the date hereof; (c) the
number of shares of capital stock issuable pursuant to the Company's stock
plans; and (d) the number of shares of capital stock issuable and reserved for
issuance pursuant to securities (other than the Notes) exercisable for, or
convertible into or exchangeable for any shares of capital stock. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid and nonassessable, except to
the extent that the failure of the foregoing to be true and correct would not
have a Material Adverse Effect. Except as set forth on Schedule 4.3, no Person
is entitled to preemptive or similar statutory or contractual rights with
respect to any securities of the Company. Except as set forth on Schedule 4.3,
there are no outstanding warrants, options, convertible securities or other
rights, agreements or arrangements of any character under which the Company is
or may be obligated to issue any equity securities of any kind, and except as
contemplated by this Agreement or set forth on Schedule 4.3, the Company is not
currently in negotiations for the issuance of any equity securities of any kind.
Except as set forth on Schedule 4.3, the Company has no knowledge of any voting
agreements, buy-sell agreements, option or right of first purchase agreements or
other agreements of any kind among any of the securityholders of the Company
relating to the securities of the Company held by them. Except as set forth on
Schedule 4.3, the Company has not granted any Person the right to require the
Company to register any securities of the Company under the 1933 Act, whether on
a demand basis or in connection with the registration of securities of the
Company for its own account or for the account of any other Person.
4.4. Valid Issuance. As of the Closing, the Company has reserved a
sufficient number of shares of Common Stock for the issuance upon conversion of,
as payment for interest on or repayment of principal of, and otherwise pursuant
to, the Notes. The Notes and Underlying Shares are duly authorized, and such
Securities, when issued in accordance herewith and, in respect of the Underlying
Shares issued pursuant to the terms of the Notes, will be validly issued, fully
paid, non-assessable and free and clear of all encumbrances and restrictions,
except for restrictions on transfer imposed by applicable securities laws. The
number of shares to be reserved hereunder shall be determined without regard to
any restrictions on beneficial ownership contained in the Agreements.
4.5. Consents. The execution, delivery and performance by the Company
of the Agreements and, subject to the truth and accuracy of the representations
made by the Purchasers in Sections 5 of this Agreement, the offer, issuance and
sale of the Securities, require no consent of, action by or in respect of, or
filing with, any Person, governmental body, agency, or official, other than
filings that have been made pursuant to applicable state securities laws and
post-sale filings pursuant to applicable state and
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federal securities laws and the requirements of the Nasdaq Stock Market, which
the Company undertakes to file within the applicable time periods. The Company
has been verbally advised by the NASD that the discussions with the Company and
the review by the NASD of the executed term sheet describing the transactions
contemplated hereby should cause the NASD to conclude that the transactions
contemplated hereby should not be integrated with any prior offering or issuance
of securities by the Company, including without limitation the offering and sale
of the 2002 Notes, the Company's April 21, 2003 offering of Series B 8%
Cumulative Convertible Preferred Stock and warrants to purchase shares of Common
Stock or the Company's July 2, 2003 offering of Common Stock and warrants to
purchase Common Stock (subject to the NASD's review of the final transaction
documents for the transactions contemplated hereby).
4.6. Delivery of SEC Filings; Business. The SEC Filings represent all
filings required of the Company pursuant to the 1934 Act since December 31,
2001. The SEC Filings complied as to form in all material respects with the
requirements of the 1934 Act and did not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading. The Company is engaged only in the business described in
the SEC Filings and the SEC Filings contain a complete and accurate description
of the business of the Company in all material respects. The Company has not
provided to any Purchaser (i) any information required to be filed under the
1934 Act that has not been so filed or (ii) any material nonpublic information.
4.7. Use of Proceeds. The proceeds of the sale of the Securities
hereunder shall be used by the Company for working capital and general corporate
purposes.
4.8. No Material Adverse Change. Since December 31, 2002, except as
disclosed and described in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002 and the Company's Form 10-Qs filed with the
SEC for the fiscal quarters ending March 31, 2003, June 30, 2003 and September
30, 2003, or any other reports filed by the Company subsequent to such Form 10-K
pursuant to the 1934 Act and filed at least ten (10) days prior to the date
hereof, there has not been:
(i) any change in the consolidated assets, liabilities, financial
condition or operating results of the Company from that reflected in the
financial statements included in the Company's Form 10-K for the fiscal year
ended December 31, 2002, except changes in the ordinary course of business which
have not had, in the aggregate, a Material Adverse Effect;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;
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(iii) any material damage, destruction or loss, whether or not
covered by insurance, to any assets or properties of the Company or any of its
subsidiaries;
(iv) any waiver by the Company of a material right or of a
material debt owed to it;
(v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company taken as a
whole (as such business is presently conducted and as it is proposed to be
conducted);
(vi) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(vii) any material labor difficulties or labor union organizing
activities with respect to employees of the Company;
(viii) any transaction entered into by the Company other than in
the ordinary course of business; or
(ix) any other event or condition of any character that may have
a Material Adverse Effect.
4.9. Registration Statements; Material Contracts.
(a) During the preceding two years, each registration statement
and any amendment thereto filed by the Company pursuant to the 1933 Act, as of
the date such statement or amendment became effective, complied as to form in
all material respects with the 1933 Act and did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading; and each
prospectus filed pursuant to Rule 424(b) under the 1933 Act, as of its issue
date and as of the closing of any sale of securities pursuant thereto did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
(b) Except as set forth on Schedule 4.3 hereto, there are no
agreements or instruments currently in force and effect that constitute a
warrant, option, convertible security or other right, agreement or arrangement
of any character under which the Company is or may be obligated to issue any
material amounts of any equity security of any kind, or to transfer any material
amounts of any equity security of any kind.
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4.10. Form S-3 Eligibility. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form S-3
under the 0000 Xxx.
4.11. No Conflict, Breach, Violation or Default; Compliance with Law.
The execution, delivery and performance of the Agreements by the Company and the
issuance and sale of the Securities will not conflict with or result in a breach
or violation of any of the terms and provisions of, or constitute a default
under (i) the Company's Certificate of Incorporation (including any certificates
of designation) or the Company's Bylaws, both as in effect on the date hereof
(copies of which have been provided to the Purchasers before the date hereof),
or (ii) except where it would not have a Material Adverse Effect, (A) any
statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any of its
properties, or (B) any agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the properties of the
Company is subject. Except where it would not have a Material Adverse Effect,
the Company (i) is not in violation of any statute, rule or regulation
applicable to the Company or its assets, (ii) is not in violation of any
judgment, order or decree applicable to the Company or its assets, and (iii) is
not in breach or violation of any agreement, note or instrument to which it or
its assets are a party or are bound or subject. The Company has not received
notice from any Person of any claim or investigation that, if adversely
determined, would render the preceding sentence untrue or incomplete
4.12. Tax Matters. The Company has timely prepared and filed all tax
returns required to have been filed by the Company with all appropriate
governmental agencies and timely paid all taxes owed by it, in each case taking
into account permitted extensions. The charges, accruals and reserves on the
books of the Company in respect of taxes for all fiscal periods are adequate in
all material respects, and there are no material unpaid assessments against the
Company nor, to the knowledge of the Company, any basis for the assessment of
any additional taxes, penalties or interest for any fiscal period or audits by
any federal, state or local taxing authority except such as which are not
material. All material taxes and other assessments and levies that the Company
is required to withhold or to collect for payment have been duly withheld and
collected and paid to the proper governmental entity or third party when due.
There are no tax liens or claims pending or threatened against the Company or
any of its respective assets or property. There are no outstanding tax sharing
agreements or other such arrangements between the Company and any other
corporation or entity.
4.13. Title to Properties and Securities. Except as disclosed in the
SEC Filings, the Company has good and marketable title to all real properties
and all other properties and assets owned by it, in each case free from liens,
encumbrances and defects (other than the Mortgage) that would materially affect
the value thereof or materially interfere with the use made or currently planned
to be made thereof by them; and except as disclosed in the SEC Filings, the
Company holds any leased real or personal property under valid and enforceable
leases with no exceptions that would materially interfere with the use made or
currently planned to be made thereof by them. The Operating Subsidiary owns all
the Mortgaged Property (as defined in the Mortgage) free and clear of all liens,
claims, encumbrances and defects (other than the Mortgage) except those that
would not individually or in the aggregate materially affect the value thereof
or materially interfere with
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the use made or currently planned to be made thereof. The Company (excluding its
subsidiaries) does not own any assets other than the securities of each of its
wholly-owned subsidiaries and does not engage in any operating activities other
than acting as a holding company of the securities of such subsidiaries. All of
the Company's operating assets and properties are owned or leased by the
Operating Subsidiary, except for the Company's intellectual property rights
which are entirely owned by NexMed Holdings, Inc., a Delaware corporation
("Holdings"), which is wholly-owned subsidiary of the Company, and except for
assets located outside the United States, which are entirely owned by (a) NexMed
International Limited, a corporation which is organized under the laws of the
British Virgin Islands and which is wholly-owned subsidiary of the Company
("International"), (b) NexMed (Americas) Limited, incorporated in Nova Scotia
and wholly-owned by International, or (c) NexMed International Limited,
incorporated in Hong Kong and wholly-owned by International. Holdings does not
engage in any activities except for holding the intellectual property rights of
the Company, and International and its two subsidiaries do not engage in any
business or activities in the United States.
4.14. Certificates, Authorities and Permits. The Company possesses
adequate certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by it and has
not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if determined
adversely to the Company, would individually or in the aggregate have a Material
Adverse Effect.
4.15. No Labor Disputes. Except as disclosed in the SEC Filings, no
material labor dispute with the employees of the Company exists or, to the
knowledge of the Company, is imminent.
4.16. Intellectual Property. The Company owns or possesses adequate
rights or licenses to the inventions, know-how, patents, patent rights,
copyrights, trademarks, trade names, licenses, approvals, governmental
authorizations, trade secrets confidential information and other intellectual
property rights (collectively, "Intellectual Property Rights"), free and clear
of all liens, security interests, charges, encumbrances, equities and other
adverse claims, necessary to conduct the business now operated by it, or
presently employed by it, and presently contemplated to be operated by it, and
the Company has not received any notice of infringement of or conflict with
asserted rights of others with respect to any Intellectual Property Rights
except as disclosed in the SEC Filings. Except as set forth on Schedule 4.16
hereto or as disclosed in the SEC Filings, none of the Company's Intellectual
Property Rights have expired or terminated, or are expected to expire or
terminate within three years from the date of this Agreement, except where such
expirations or termination would not result, either individually or in the
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aggregate, in a Material Adverse Effect. To the knowledge of the Company, the
Company's patents and other Intellectual Property Rights and the present
activities of the Company do not infringe any patent, copyright, trademark,
trade name or other proprietary rights of any third party where such
infringement may cause a Material Adverse Effect on the Company, and there is no
claim, action or proceeding being made or brought against, or to the Company's
knowledge, being threatened against, the Company regarding its Intellectual
Property Rights, and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company has no knowledge of the
material infringement of its Intellectual Property Rights by third parties and
has no reason to believe that any of its Intellectual Property Rights is
unenforceable, and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing. The Company has taken commercially
reasonable security measures to protect the secrecy, confidentiality and value
of all of its intellectual properties.
4.17. Mortgage Representations. All of the representations and
warranties contained in the Mortgage are true and correct as of the date hereof.
4.18. Litigation. Except as disclosed in the SEC Filings, there are no
pending actions, suits or proceedings against or affecting the Company or any of
its properties that, if determined adversely to the Company, would individually
or in the aggregate have a Material Adverse Effect or would materially and
adversely affect the ability of the Company to perform its obligations under the
Agreements, or which are otherwise material in the context of the sale of the
Securities; and to the Company's knowledge, no such actions, suits or
proceedings are threatened or contemplated.
4.19. Financial Statements. The financial statements included in each
SEC Filing present fairly and accurately in all material respects the
consolidated financial position of the Company as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis. Except as set
forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof, the Company has no liabilities, contingent or
otherwise, except those which individually or in the aggregate are not material
to the financial condition or operating results of the Company.
4.20. Insurance Coverage. The Company maintains in full force and
effect insurance coverage that the Company reasonably believes to be adequate
against all liabilities, claims and risks against which it is customary for
comparably situated companies to insure.
4.21. Compliance with Nasdaq Continued Listing Requirements. The
Company is in compliance with all applicable Nasdaq National Market continued
listing requirements. There are no proceedings pending or to the Company's
knowledge threatened against the Company relating to the continued listing of
the Company's
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Common Stock on the Nasdaq National Market and the Company has not received any
notice of, nor to the knowledge of the Company is there any basis for, the
delisting of the Common Stock from the Nasdaq National Market.
4.22. [Intentionally Left Blank]
4.23. Brokers and Finders. Neither the Purchasers nor the Company shall
have any liability or responsibility for the payment of any commission or any
finder, agent, broker or consultant fee to any third party in connection with or
resulting from this agreement or the transactions contemplated by this Agreement
by reason of any agreement of or action taken by the Company, and the Company
shall not pay any such commission or fee.
4.24. No General Solicitation. Neither the Company nor any Person
acting on its behalf has conducted any general solicitation or general
advertising (as those terms are used in Regulation D) in connection with the
offer or sale of any of the Securities.
4.25. No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would adversely affect reliance by
the Company on Section 4(2) of the 1933 Act for the exemption from registration
for the transactions contemplated hereby or would require registration of the
Securities under the 0000 Xxx.
4.26. Disclosures. No representation or warranty made by the Company
under any section hereof and no written information furnished by the Company to
the Purchasers or any authorized representative of the Purchasers, pursuant to
the Agreements or in connection therewith, contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which the statements were made, not misleading.
5. Representations and Warranties of the Purchaser. Each of the Purchasers
hereby severally, and not jointly, represents and warrants to the Company as to
itself only that:
5.1. Organization and Existence. The Purchaser is a validly existing
corporation, partnership or limited liability company and has all requisite
corporate, partnership or limited liability company power and authority to
invest in the Securities pursuant to this Agreement.
5.2. Authorization. The execution, delivery and performance by the
Purchaser of this Agreement and the Registration Rights Agreement have been duly
authorized and this Agreement and the Registration Rights Agreement will each
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constitute the valid and legally binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability, relating to or affecting creditors'
rights generally.
5.3. Purchase Entirely for Own Account. The Securities to be received
by the Purchaser hereunder will be acquired for the Purchaser's own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof in violation of securities laws, and the Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of securities laws. The Purchaser is not a registered
broker dealer or an entity engaged in the business of being a broker dealer.
5.4. Investment Experience. The Purchaser acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters and in private
placement transactions of companies similar to the Company so that it is capable
of evaluating the merits and risks of the purchase contemplated hereby.
5.5. Disclosure of Information. The Purchaser has had an opportunity to
receive documents related to the Company and to ask questions of and receive
answers from the Company regarding the Company, its business and the terms and
conditions of the offering of the Securities and has received and read the SEC
Filings filed via XXXXX at least five days prior to the date hereof. Neither
such inquiries nor any other due diligence investigation conducted by the
Purchaser shall modify, amend or affect the Purchaser's right to rely on the
Company's representations and warranties contained in this Agreement or made
pursuant to this Agreement.
5.6. Restricted Securities. The Purchaser understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws, applicable
state laws and applicable regulations such securities may be resold without
registration under the 1933 Act only in certain limited circumstances.
5.7. Legends. It is understood that, until registration for resale
pursuant to the Registration Rights Agreement or until sales under Rule 144 are
permitted, certificates evidencing the Underlying Shares may bear a legend
substantially similar to that contained on the Notes and, if required by the
authorities of any state in connection with the issuance or sale of the
Securities, the legend required by such state authority.
Upon registration for resale pursuant to the Registration Rights
Agreement or upon Rule 144(k) under the 1933 Act becoming available (and the
holder thereof confirming that it is not an affiliate of the Company upon such
Rule 144(k) becoming available), the Company shall promptly cause certificates
evidencing the Underlying
13
Shares previously issued to be replaced with certificates which do not bear such
restrictive legends, and all Underlying Shares subsequently issued shall not
bear such restrictive legends. In the event that the Company does not issue new,
unlegended certificates in replacement of the legended certificates as required
under this Section 5.7 within 10 business days of a written request to do so, or
if any subsequently issued Underlying Shares are issued with restrictive legends
when unlegended certificates are required under this Section 5.7, the Company
shall be liable to the Purchaser (or subsequent holder thereof) for damages in
an amount of $500 cash for each such day beyond the replacement date (or
issuance date, in the case of newly converted Notes) that such unlegended
certificates are not issued and delivered to the Purchaser or subsequent holder.
5.8. Accredited Investor. The Purchaser is an "accredited investor" as
defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act.
5.9. No General Solicitation. The Purchaser did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
6. Closing Documents. The parties acknowledge and agree that part of the
inducement for the Purchasers to enter into this Agreement is the Company's
execution and delivery of the Registration Rights Agreement and the execution
and delivery of the Subsidiary Guarantee and the Mortgage Modification by the
Operating Subsidiary. The parties acknowledge and agree that on or prior to the
Closing, the Registration Rights Agreement, Subsidiary Guarantee and the
Mortgage Modification will be duly executed and delivered by the parties
thereto.
7. Covenants and Agreements of the Company.
7.1. Rule 144. The Company agrees that, for purposes of determining the
holding period under Rule 144 of the 1933 Act for Underlying Shares issued upon
conversion of the Notes, the holding period of such Underlying Shares shall be
tacked to the holding period of the Notes. The Company agrees to make publicly
available on a timely basis the information necessary to enable Rule 144 under
the 1933 Act to be available for resale of the Underlying Shares.
7.2. Limitation on Transactions.
(a) So long as any of the Notes remain outstanding, without the
prior written consent of the holders of a majority-in-interest of the Notes
(which consent may be withheld in such holders' discretion), the Company shall
not issue or sell or agree to issue or sell any securities in a Variable Rate
Transaction, provided, however, that without such consent, the Company may issue
or sell for cash any securities in a Variable Rate Transaction so long as the
total number of shares of Common Stock issued and/or agreed to be issued in the
aggregate for all such transactions (determined as if all such securities as of
their issuance are deemed fully converted, exercised and exchanged into
14
Common Stock without regard to limitations or restrictions contained therein)
represents less than seven percent (7%) of the total number of the Company's
issued and outstanding shares of Common Stock as of the closing date of any such
transaction.
(b) So long as any Notes remain outstanding, the Company shall
not directly or indirectly, create, incur, assume or permit or suffer to exist
any lien, mortgage, security interest or encumbrance (other than statutory liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof) upon any of the Mortgaged Property (as defined in the
Mortgage) except for those created by the Mortgage (as modified by the Mortgage
Modification) and shall not directly or indirectly sell, transfer or lease any
of the Mortgaged Property.
7.3. [Intentionally left blank].
7.4. No Integration. Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf, shall directly or indirectly make any
offers or sales of any securities or solicit any offers to buy any securities
under circumstances that would cause the loss of the 4(2) exemption under the
Securities Act for the transactions contemplated hereby. Subject to any consent
or approval rights of the Purchasers hereunder, in the event the Company
contemplates an offering of its equity or debt securities within six months
following the Closing Date, the Company agrees that it shall notify the
Purchasers of such offering (without providing any material non-public
information to any Purchaser without its prior approval), and upon the
reasonable request of Purchasers purchasing at least 75% in principal amount of
the Notes hereunder, the Company shall first disclose the terms and conditions
and other relevant facts of such proposed transaction to Nasdaq and obtain from
Nasdaq its verbal advice (subject to the NASD's review of the executed
transaction documents for such transaction) that such transaction should not be
integrated with the offering which is the subject of this Agreement for purposes
of the Nasdaq rules requiring shareholder approval of the issuance of 20% or
more of an issuer's outstanding common stock. In the event the Company fails to
obtain such advise, then the Company shall not issue or sell any such securities
without the prior written consent of Purchasers purchasing at least 75% in
principal amount of the Notes hereunder, provided that the Company may sell or
issue securities without such consent if (i) it obtains prior shareholder
approval for such sale or issuance in compliance with NASD rules, (ii) such sale
or issuance is to a pharmaceutical company in connection with a strategic
transaction and not primarily as a capital raising transaction, so long as the
Company has not affirmatively been notified (orally or in writing) by Nasdaq
that it is reasonably likely to treat such sale or issuance as being integrated
with the transactions contemplated under this Agreement, or (iii) none of the
Notes are then outstanding, so long as the Company has not affirmatively been
notified (orally or in writing) by Nasdaq that it is reasonably likely to treat
such sale or issuance as being integrated with the transactions contemplated
under this Agreement. In the event
15
that the transactions contemplated under this Agreement are deemed integrated
with any other transaction(s) by the NASD, then the Company shall as soon as
possible seek the approval of its stockholders and take such other action to
authorize the issuance of the full number of Underlying Shares and the full
amount of securities issued and/or to be issued in such other transaction.
7.5. Opinion of Counsel. On or prior to the Closing Date, the Company
will deliver to the Purchasers the opinions of legal counsel to the Company
substantially in the form and substance attached hereto as Exhibit E.
7.6. Reservation of Common Stock issuable upon Conversion of Notes. The
Company hereby agrees at all times to reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
providing for the full conversion of Notes (including payment and repayment of
interest and principal thereon), such number of shares of Common Stock as shall
from time to time equal the number of shares sufficient to permit the full
conversion of Notes (including payment and repayment of interest and principal
thereon) in accordance with the terms of the Notes. All calculations pursuant to
this paragraph shall be made without regard to restrictions on beneficial
ownership.
7.7. Reports. For so long as the Purchasers beneficially own the Notes,
the Company will furnish to the Purchasers the following reports, each of which
shall be provided to the Purchasers by air mail or reputable international
courier (within one week of filing with the SEC, in the case of SEC filings), to
the extent not filed on and available at that time via XXXXX:
(a) Quarterly Reports. As soon as available and in any event
within 45 days after the end of each fiscal quarter of the Company, the
Company's quarterly report on Form 10-Q or, in the absence of such report,
consolidated balance sheets of the Company as at the end of such period and the
related consolidated statements of operations, stockholders' equity and cash
flows for such period and for the portion of the Company's fiscal year ended on
the last day of such quarter, all in reasonable detail and certified by the
Company to have been prepared in accordance with generally accepted accounting
principles, subject to year-end and audit adjustments.
(b) Annual Reports. As soon as available and in any event within
90 days after the end of each fiscal year of the Company, the Company's Form
10-K or, in the absence of a Form 10-K, consolidated balance sheets of the
Company as at the end of such fiscal year and the related consolidated
statements of earnings, stockholders' equity and cash flows for such year, all
in reasonable detail and accompanied by the report on such consolidated
financial statements of an independent certified public accountant selected by
the Company and reasonably satisfactory to the Purchaser.
(c) Securities Filings. As promptly as practicable and in any
event within five days after the same are issued or filed, copies of (i) all
notices, proxy
16
statements, financial statements, reports and documents as the Company shall
send or make available generally to its stockholders or to financial analysts,
and (ii) all periodic and special reports, documents and registration statements
(other than on Form S-8) which the Company furnishes or files, or, to the extent
also delivered to the Company, any officer or director of the Company (in such
person's capacity as such) furnishes or files with the SEC.
(d) Other Information. Such other information relating to the
Company as from time to time may reasonably be requested by any Purchaser
provided the Company produces such information in its ordinary course of
business, and further provided that the Company, solely in its own discretion,
determines that such information is not confidential in nature and disclosure to
the Purchaser would not be harmful to the Company or violate any rules or
regulations of the SEC or the Nasdaq Stock Market.
7.8. Press Releases. Any press release or other publicity concerning
this Agreement or the transactions contemplated by this Agreement shall be
submitted to the Purchasers for comment at least two (2) business days prior to
issuance, unless the release is required to be issued within a shorter period of
time by law or pursuant to the rules of the NASDAQ Stock Market or a national
securities exchange. The Company shall issue a press release concerning the fact
and material terms of this Agreement within one business day of the Closing.
7.9. No Conflicting Agreements. The Company will not take any action,
enter into any agreement or make any commitment that would conflict or interfere
in any material respect with the obligations to the Purchasers under the
Agreements.
7.10. Insurance. For so long as any Purchaser beneficially owns any of
the Securities, the Company shall have in full force and effect (a) insurance
reasonably believed by the Company to be adequate on all assets and activities,
covering property damage and loss of income by fire or other casualty, and (b)
insurance reasonably believed to be adequate protection against all liabilities,
claims and risks against which it is customary for companies similarly situated
as the Company to insure.
7.11. Compliance with Laws. So long as the Purchasers beneficially own
any Securities, the Company will use reasonable efforts to comply with all
applicable laws, rules, regulations, orders and decrees of all governmental
authorities, except to the extent non-compliance (in one instance or in the
aggregate) would not have a Material Adverse Effect.
7.12. Listing of Underlying Shares and Related Matters. The Company
hereby agrees, promptly following the Closing of the transactions contemplated
by this Agreement, to take such action to cause the Underlying Shares to be
listed on the Nasdaq National Market as promptly as possible but no later than
the effective date of the registration contemplated by the Registration Rights
Agreement. The Company further agrees that if the Company applies to have its
Common Stock or other securities traded
17
on any other principal stock exchange or market, it will include in such
application the Underlying Shares and will take such other action as is
necessary to cause such Common Stock to be so listed. For so long as any Notes
remain outstanding, the Company will take all action necessary to continue the
listing and trading of its Common Stock on the Nasdaq National Market or on the
Nasdaq Small-Cap Market, the New York Stock Exchange or the American Stock
Exchange (collectively, "Approved Markets"), and will comply in all respects
with the Company's reporting, filing and other obligations under the bylaws or
rules of such exchange or market, as applicable, to ensure the continued
eligibility for trading of the Underlying Shares thereon.
7.13. Corporate Existence. So long as any Notes remain outstanding, the
Company shall maintain its corporate existence, except in the event of a merger,
consolidation or sale of all or substantially all of the Company's assets, as
long as the surviving or successor entity in such transaction (a) assumes the
Company's obligations hereunder and under the agreements and instruments entered
into in connection herewith, regardless of whether or not the Company would have
had a sufficient number of shares of Common Stock authorized and available for
issuance in order to fulfill its obligations hereunder and effect the conversion
(including payment on) in full of all Notes outstanding as of the date of such
transaction; (b) has no legal, contractual or other restrictions on its ability
to perform the obligations of the Company hereunder and under the agreements and
instruments entered into in connection herewith; and (c)(i) is a publicly traded
corporation whose common stock and the shares of capital stock issuable upon
conversion of the Notes are (or would be upon issuance thereof) listed for
trading on an Approved Market or (ii) if not such a publicly traded corporation,
then the buyer agrees that it will, at the election of the Purchasers, purchase
such Purchasers' Securities at a price equal to the greater of (a) 110% of the
Purchase Price of such Securities or (b) the fair market value of such
Securities on an as-converted basis based on the closing price immediately
preceding such transaction or the redemption date, whichever is greater.
7.14. Insurance Endorsement. The Company agrees that on or prior to
December 31, 2003, it shall deliver to the Purchasers (or their counsel) each of
(a) an original endorsement to the Company's Commercial General Liability
Insurance Policy/Umbrella Liability Insurance Policy naming the Purchasers as
additional insureds, and (b) an original Standard New Jersey Mortgagee
Non-Contribution Clause endorsement to the Company's "all risk" property
insurance policy for the Mortgaged Property in favor of the Purchasers.
8. Survival. All representations, warranties, covenants and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants and agreements as of the date hereof and shall survive the execution
and delivery of this Agreement and terminate upon expiration of the applicable
statute of limitations.
9. Miscellaneous.
18
9.1. Successors and Assigns. This Agreement may not be assigned by a
party hereto without the prior written consent of the other parties hereto which
consent may not be unreasonably withheld or delayed, except that without the
prior written consent of the Company, but after notice duly given, a Purchaser
may assign its rights and delegate its duties hereunder in whole or in part to
an Affiliate or to any Person to which such Purchaser has transferred or
assigned all or part of its Notes in accordance with the terms of the Notes,
provided in each case that such Affiliate, transferee or assignee acknowledges
in writing to the Company that the representations and warranties contained in
Section 5 hereof shall apply to such Affiliate, transferee or assignee. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective permitted successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
9.2. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may be
executed by facsimile.
9.3. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given only by delivery to each party to be notified by (i) personal
delivery, (ii) telex or telecopier, provided it is sent with electronic
confirmation of complete transmittal, or (iii) an internationally recognized
overnight air courier, addressed to the party to be notified at the address as
follows, or at such other address as such party may designate by ten days'
advance written notice to the other party:
If to the Company:
NexMed, Inc.
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
19
Attention: Xxxxxx Xxxx, Esq.
If to the Purchasers, to the addresses set forth on the
signature pages hereto.
Any notice or other communication or deliveries hereunder shall be deemed
delivered (i) upon receipt, if delivered personally, (ii) if sent by facsimile,
upon receipt if received on a Business Day prior to 5:00 p.m. (Eastern Time), or
on the first Business Day following such receipt if received on a Business Day
after 5:00 p.m. (Eastern Time) or (iii) two (2) Business Days following deposit
with an internationally recognized overnight courier service.
9.5. Expenses.
(a) The parties hereto shall pay their own costs and expenses in
connection herewith, except that the Company shall pay to Tail Wind Advisory and
Management Ltd. ("TWAM") a non-refundable sum equal to $30,000 as and for legal
and due diligence expenses incurred in connection herewith, all of which shall
be paid upon Closing.
(b) The Company shall pay the costs of all title, UCC, judgment, lien
and similar searches in connection with the Mortgage and Mortgage Modification,
and shall pay all title insurance premiums on the Mortgaged Property in
connection with Purchasers' title insurance policy (updated through the Closing
Date). The Company shall also pay all costs and expenses hereafter incurred in
amending, implementing, perfecting, collecting, defending, declaring and
enforcing and otherwise relating to the Purchasers' rights and security
interests in the Mortgaged Property hereunder or under the Notes or any other
instrument or agreement delivered in connection herewith or therewith,
including, but not limited to, searches and filings after the date hereof
(provided that the Company shall not be responsible for any costs and expenses
incurred by the Purchasers in connection with the negotiation, execution and
delivery of the Mortgage Modification or any other Agreements, except as may be
provided above or elsewhere herein or therein). For clarification, the costs
payable by the Company pursuant to this Section 9.5(b) are in addition to the
sum payable to TWAM pursuant to Section 9.5(a) above.
9.6. Amendments and Waivers. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and 75% in interest of the Purchasers,
provided, however, that any such amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any Securities purchased
under this Agreement at the time outstanding, each future holder of all such
securities, and the Company.
20
9.7. Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
9.8. Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, and the Registration Rights Agreement, the Notes and other
documents contemplated hereby constitute the entire agreement among the parties
hereof with respect to the subject matter hereof and thereof and supersede all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter hereof (except that the Mortgage Modification
modifies the Mortgage which shall remain in full force and effect).
9.9. Further Assurances. The parties shall execute and deliver all such
further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
9.10. Applicable Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
9.11. Remedies.
(a) The Purchasers shall be entitled to specific performance of
the Company's obligations under the Agreements.
(b) The Company on the one hand, and each Purchaser severally and
not jointly on the other hand, shall indemnify the other and hold it harmless
from any loss, cost, expense or fees (including attorneys' fees and expenses)
arising out of any breach of any representation, warranty, covenant or agreement
in any of the Agreements, or arising out of the enforcement of this Section
9.11.
9.12. Jurisdiction. The parties hereby agree that all actions or
proceedings arising directly or indirectly from or in connection with this
Agreement or the other Agreements shall be litigated only in the Supreme Court
of the State of New York or the United States District Court for the Southern
District of New York located in New York County, New York, except for actions or
proceedings arising directly or indirectly from or in connection with the
Mortgage (as modified by the Mortgage Modification), which may be litigated in
the applicable court(s) in New Jersey. The parties consent to the jurisdiction
and venue of the foregoing courts and consent that any process or notice of
motion or other application to either of said courts or a judge thereof may be
served inside or outside the State of New York or the Southern District of New
York by registered mail, return receipt requested, directed to the party being
served at its address set forth in this Agreement (and service so made shall be
deemed complete three (3) days
21
after the same has been posted as aforesaid) or by personal service or in such
other manner as may be permissible under the rules of said courts. The Company
and the Purchasers hereby waive any right to a jury trial in connection with any
litigation pursuant to this Agreement or the other Agreements.
9.13. Like Treatment of Purchasers and Holders. Neither the Company nor
any of its affiliates shall, directly or indirectly, pay or cause to be paid any
consideration (immediate or contingent), whether by way of interest, fee,
payment for the redemption, conversion or exercise of the Securities, or
otherwise, to any Purchaser or holder of Securities, for or as an inducement to,
or in connection with the solicitation of, any consent, waiver or amendment of
any terms or provisions of the Agreements, unless such consideration is required
to be paid to all Purchasers or holders of Securities bound by such consent,
waiver or amendment. The Company shall not, directly or indirectly, redeem any
Securities unless such offer of redemption is made pro rata to all Purchasers or
holders of Securities, as the case may be, on identical terms. For clarification
purposes, this provision constitutes a separate right granted to each Purchaser
by the Company and negotiated separately by each Purchaser, and shall not in any
way be construed as the Purchasers acting in concert or as a group with respect
to the purchase, disposition or voting of Securities or otherwise.
9.14. Actions of Purchasers. The obligations of each Purchaser
hereunder and under the documents contemplated hereby are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall in any way
be responsible for the performance of the obligations of any other Purchaser
under any such document. Nothing contained herein or in any other document
contemplated hereby, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute any of the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated hereby or
thereby. Each Purchaser confirms that it has independently participated in the
negotiation of the transaction contemplated hereby with the advice of its own
counsel and advisors. Each Purchaser shall be entitled to independently protect
and enforce its rights, including, without limitation, the rights arising out of
this Agreement or out of any other document contemplated hereby, and it shall
not be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose. Notwithstanding anything herein to the
contrary, the actions and obligations of the Purchasers hereunder shall at all
times be considered several and not joint, and the Purchasers are not, under any
circumstances, agreeing to act jointly with respect to the Securities or any of
their actions or obligations under the Agreements, and shall not constitute a
"group" under the 1934 Act. Each Purchaser acknowledges that no other Purchaser
has acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
22
Agreements, and it shall not be necessary for any other Purchaser to be joined
as an additional party in any proceeding for such purpose. The Company has
elected to provide all Purchasers with the same terms and Agreements for the
convenience of the Company and not because it was required or requested to do so
by the Purchasers.
9.15. Collateral Agent. The Purchasers hereby appoint (or confirm the
continued appointment of) The Tail Wind Fund Ltd. as "Collateral Agent" under
the Mortgage (as modified by the Mortgage Modification). The Collateral Agent
may be removed, and a successor Collateral Agent may be appointed, by a
majority-in-interest of holders of the Notes, and any Collateral Agent may
resign from such position upon thirty days prior notice to the Company (which
shall constitute notice to the Operating Subsidiary) and the holders of Notes.
If a successor Collateral Agent does not take such position within 30 days after
the retiring Collateral Agent resigns or is removed, the retiring Collateral
Agent or a majority-in-interest of the holders of the Notes may petition any
court of competent jurisdiction for the appointment of a successor Collateral
Agent. The Collateral Agent will act or refrain from acting based on the
direction of a majority-in-interest of holders of the Notes, and may take any
action or refrain from taking any action as provided in the Mortgage as it shall
determine in its reasonable judgment and discretion. With respect to any monies
or property held by, or expended by, the Collateral Agent on behalf of the
holders of the Notes, such amounts shall be allocated pro rata based on the
principal amount of Notes outstanding. The Collateral Agent shall be reimbursed
by the holders of Notes for all reasonable expenses incurred in connection with
acting as Collateral Agent under the Mortgage (provided that this shall in no
way affect any liability of the Operating Subsidiary or the Company under the
Mortgage). The Collateral Agent may refuse to perform any duty or exercise any
right or power unless it receives indemnity satisfactory to it against any loss,
liability or expense. No implied covenants or obligations shall be read into
this Agreement or the Mortgage against Collateral Agent. Except for Collateral
Agent's own willful misconduct, bad faith or gross negligence, the Collateral
Agent (i) may rely and/or act upon any written instrument, document or request
believed by the Collateral Agent in good faith to be genuine and to be executed
and delivered by the proper person(s), and may assume in good faith the
authenticity, validity and effectiveness thereof and shall not be obligated to
make any investigation or determination as to the truth and accuracy of any
information contained therein, and (ii) shall not be responsible for the acts or
omissions of the other parties hereto or holders of Notes. In consideration of
its acceptance of the appointment as the Collateral Agent, each of the
Purchasers (and any subsequent holder of the Notes) jointly and severally agree
to indemnify the Collateral Agent against, and hold the Collateral Agent
harmless from, all costs, damages, expenses (including reasonable attorney's
fees and disbursements) and liabilities that the Collateral Agent may incur or
sustain in connection with serving as Collateral Agent under the Mortgage,
unless such costs, damages, expenses and liabilities are caused by the
Collateral Agent's own willful misconduct, bad faith or gross negligence.
23
9.16. Conversion of Prior Notes. The Tail Wind Fund Ltd. agrees that
upon the Closing it shall deliver to the Company a conversion notice electing to
irrevocably convert in full the outstanding balance under the 2002 Notes
(provided the applicable Underlying Shares, as defined in the 2002 Notes, are
timely issued and delivered to The Tail Wind Fund Ltd. in accordance with the
terms of the 2002 Notes).
[REMAINDER OF PAGE INTENTIONALLY BLANK]
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY: NEXMED, INC.
By:/s/ Xxxxxx X. Xxx
-----------------
Name: Xxxxxx X. Xxx
Title: Vice President and Secretary
25
THE PURCHASERS:
THE TAIL WIND FUND LTD.
By: TAIL WIND ADVISORY AND
MANAGEMENT LTD., as
investment manager
By: /s/ Xxxxx Xxxxx
----------------
Name: Xxxxx Xxxxx
Title: CEO
Aggregate Purchase Price: $5,500,000
Principal Amount of Notes: $5,500,000
Resident: BVI
Address for Notices: The Tail Wind Fund Ltd.
c/o Tail Wind Advisory and Management Ltd.
Attn: Xxxxx Xxxxx
1st Floor, No. 0 Xxxxxx Xxxxxx
Xxxxxx, XX0X 0XX XX
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
with a copy to:
Xxxxx X. Xxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
26
SOLOMON STRATEGIC HOLDINGS, INC.
By: /s/ Xxxxxx X. XxxXxxxxx
-----------------------
Name: Xxxxxx X. XxxXxxxxx
Title: Director
Aggregate Purchase Price: $500,000
Principal Amount of Notes: $500,000
Resident: BVI
Address for Notices: Solomon Strategic Holdings, Inc.
c/o Xxxxxx X. XxxXxxxxx (Director)
Greenlands
The Red Gap
Xxxxxxxxxx
XX0 0XX
Xxxxxxx Xxxxx
Telephone: x000 (00) 0000 000000
Facsimile: x000 (00) 0000 000000
with a copy to:
Xxxxx X. Xxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
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